January 19, 2017No comments
Nassau County has passed a law1 creating a Sustainable Energy Loan Program and the Energize New York Benefit Financing Program. A similar bill was enacted by the Suffolk County Legislature on December 7, 2015 and became effective in April 2016.2 The County programs implement New York State’s new model of Property Assessed Clean Energy Financing (PACE), which seeks to encourage energy efficiency improvements and solar installations in commercial buildings. Pursuant to these programs, the Energy Improvement Corporation, as agent for the County, may provide funds to Qualified Property Owners to finance the acquisition, construction and installation of Renewable Energy Systems and Energy Efficiency Improvements.
Although the term “Qualified Property Owner” is defined as an owner of eligible residential or commercial property, the loans are not available for single family homes or for commercial property that is not owned by a corporation. However, multi-family homes are eligible, and there is also a mechanism for non-for-profit organizations to access the financing.
The amount of the loan is the full cost of the improvement, up to 10% of the appraised value of the property. Re-payment of the loan, which can have a term of five to twenty years,is to be made through payments on the real property tax bill. Therefore, this obligation will take precedence over a first mortgage. Another advantage of the loan, from the perspective of the property owner, is that the funds can be applied to the replacement of a roof, which is often a necessary part of a rooftop solar project. Solar providers hope the law will allow more property owners to obtain financing for the improvements and facilitate the transfer of ownership in the solar systems. However, one must keep in mind that the loan is disbursed only upon the completion and formal certification of the project by PSEG-LI. Thus, interim financing, either by the building owner or the contractor, is required. Another condition is that the project must be cash flow positive, meaning that the amount of the energy savings obtained as a result of the improvements must be greater than the loan payment amount.
Note that, in Nassau County, the bill is not yet in effect, as it awaits the signature of the County Executive, which has been delayed for unrelated reasons.
1Local Law 6-2016
2Resolution No. 919-2015 adopting Local Law No. 38-2015, a local law to establish a Sustainable Energy Loan Program.